Observations on the Port of Los Angeles

Observations on the Port of Los Angeles

This is a Jedi update on the situation at Los Angeles Harbor. Several months ago I noted the number of ships docked off of the port of Los Angeles and that few ships seemed to be in port or travelling into/out of the port.

Here's my observations from yesterday - July 12, 2013.

I drove through the Port of Los Angeles, Long Beach Freeway (710), Terminal Island fwy, Harbor Fwy (110), and the bridges yesterday. The Battleship Iowa sits docked below the largest bridge in San Pedro. The sky was beautiful and you could see for miles.

OBSERVATION

Along the freeway and bridge through the port area, containers from Maersk, Cosco, Yang Ming, Evergreen, and many other companies are stacked in groups of ten. That's ten containers side to side. But, they're stacked five, six, and seven high. So a block of 70 in a block. But, then the containers go on like that ... for what seems to be miles. I think perhaps one mile in every direction from the center of the port, there are stacks of containers!

I counted 500 containers adjacent to the freeway alone. A stack of flatbeds that are used to haul the containers is also adjacent to the freeway. There must be 10-20 of these flatbeds in one verticle pile with wheels attached. The flatbed chasses are stacked up to 4 or 5 stories high and with maybe 20-30 of these chasses stacked up. Each is the portion of the truck that is the back wheels (4 or 8 wheels attached) and then the metal frame that supports the container being hauled. I think I saw something like 500 or maybe even 1000 of these frames along the road along maybe a quarter mile of road in perhaps 20-30 piles. I didn't count because I had to drive on the freeway.

When you get up high on the bridges, you can see that the containers go on for what seems to be miles. They stretch and seem to cover any area of open space covering every section of the port of Los Angeles stacked 5 to maybe 8 high. We're talking 6 stories to 8 stories worth of these containers.

There must be 10,000 to 20,000 of these shipping containers all sitting on the port grounds and it seems to be miles of these containers.

I drove around between 11 AM and 2 PM. I first passed through in the morning and passed through again in the afternoon.

There were freight train cars in the port on the rails. Some of the cars had the containers double stacked. One train seemed to have only containers labeled "Evergreen". That train seemed to have maybe 20 containers. But, none of the trains moved yesterday. Perhaps they move the trains at night or on the weekend?

INTERPRETATION

I've never seen this number of containers stacked at the Port of Los Angeles. I've gone down this road many times and usually these areas have containers, but not this many.

There are several interpretations of seeing these containers stacked.

One thought is that some of these containers are the arriving Christmas goods from China. It's July and third quarter is starting. Christmas consumer goods need to get imported from China and distributed to the regional warehouses of the major chain stores. Is this huge number of stacked containers actually containing things? Could these containers be the US Christmas sales goods from China. But, if these containers actually have things inside, why are tens of thousands of containers sitting inert, not moving, and stacked so high? Could it be that the US Customs hasn't cleared these imported goods? Is sequestration limiting the ability of the US CBP to clear imports and exports?

My take is that these containers are mostly empty.

1. I've driven through this port previously and I've never seen so many containers stacked. This is not a normal situation. Either the containers are being imported, exported, or are empty and awaiting use.

2. These containers are not under the big cranes. If the containers were under the big cranes, then I could believe that the containers are carrying supplies or goods. Therefore, I do not believe that the containers are carrying anything.

These containers are stacked in the open yards with no cranes overhead. The containers had to have been stacked by a crane that moves around the yard. Because the stack seems to be 70 to 80 feet high, I conclude that the crane must be no more than 7 or 8 containers high (probably a 100 foot crane). The crane can not lift the container higher than itself. There are small spaces between the containers and this is likely for the crane to drive around the yard.

3. There are no web cams on the Port of Los Angeles area and stopping is not permitted on the bridges. Those roads are 55 mph freeways (the Seaside Freeway - 710). It is not possible to photograph the scene if you are driving alone.

Just to make sure I wasn't seeing things, I went to maps.google.com. The review of the images stored at maps.google.com gives me confidence in my jedi mind power.

This is a view with the harbor looking normal. You can see some containers stacked maybe 5 high in the distant background, but the foreground is mostly stacked one or maybe two high. Mostly, the containers are not stacked at all with alot of empty ground.

Yesterday, that batch of flat bed trailers was three to four times higher. The stacks of containers are six or seven high and completely covering the entire lots on both sides of the freeway.

CONCLUSION:
There is a huge slow-down in import/export through the Port of Los Angeles. Shipping companies must be storing their empty containers on the grounds of the Port of Los Angeles.

I conclude that another trip through the port next week may be in order.

Unfortunately, NBC's Today in LA announced that one of the major bridges at the Terminal Island freeway is being taken out today and is being replaced over the next few weeks. So, traffic in the area is being rerouted.

I think the 710 Seaside freeway is okay to pass.

If I go back up that way, I may take a camera to photograph the scene for you guys.

My confusion about this economic "recovery" ended yesterday.

There is no recovery.

Essentially, the policies in Washington DC and Sacramento have killed trade.

The empty containers sit inert piled 70 to 80 feet high and stretch for miles.

You can not hide 10,000 to 20,000 empty containers.

Those empty containers are like a grave stone marking the death of global trade.

Port of Los Angeles Observation update & CBC radio Jeff Rubin

A few days ago I posted observations on the Port of Los Angeles activity.

I am double checking the observations today.

Yesterday, I drove past the Port on Freeway 710 (Seaside) and noted that the stacks on the south side of the freeway were remaining very high, if not higher.

The north side of the freeway was emptied of nearly everything related to the construction of a new bridge along the Terminal Island freeway (a major access corridor into the port).

Those stacks of empty trailer rigs are still there and line about a half-mile of the freeway. The empty containers are up higher than 5 high. They're really high.

I did some additional research after posting that observation.

Here's a few shots I took yesterday.

Now, compare the last photo to the photo on Google maps from street view:

Notice that the containers behind the parking lot are only stacked one high in the google image.
In my shot, they are 5 high to 6 high. Also, the google shot shows the parking lot has single parked trailers and then the bigger stacks behind to the right. In my shot the bigger stacks are in the previously the empty lot behind the two white guard gates. My guess is that there's several hundred more empty trailer rigs parked there in stacks.

I conclude that the empty trailers and empty containers match in number. Those empty containers are the decrease in 18 wheeler trucks on the road.

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The Baltic Dry Index is derived based upon US dollars. It does not really reflect true shipping volumes. I do not really understand how or why "economists" continue to rely on derived indices rather than actual or true indicators. My opinion on BDI as an economic indicator has dropped and I now believe it more reliable to look at the cost of shipping.

If the cost of shipping is low, then there must be a relative over supply of shipping opportunities with less demand.

Interestingly, CBC (Canadian Broadcasting Corp) on Sirius XM broadcasted a very interesting town hall session with the Jeff Rubin (former Chief Economist with CIBC) and David Suzuki (Biologist/geneticist/environmentalist) in which they discuss the nexus between global commerce and economics and environmental considerations.

Ironically, Rubin discussed the exact issue that we've been discussing on this blog over the past several weeks, the high (triple digit) crude oil prices.

Rubin believes that high crude oil costs is going to drive two major changes in economic trends.

The interview linked is not the CBC program that I heard yesterday. I heard the actual event in Calgary recorded. It does not appear to be posted for download.

I would like to request TF to interview Mr. Rubin. I think both would benefit from the airing of Rubin's opinion and analysis. His analysis is outstanding and meets the precious metals world because crude oil price impacts the cost of exploration for oil as well as for gold.

He notes that the global economy does not work on $100 oil.

He states that one can not ship steel to China and ship back finished product from China for cheap enough to profit on the US side when crude oil or gasoline is >$100 per barrel. At issue is that it takes about 2 hours of work in the US to make the steel product from raw materials.

I'd like to add a few more observations.

The gas prices across Southern California are really odd. I drove around LA/So Cal and noted some $/gallon prices at $3.98, $4.40, and up at $5.40 per gallon. That is a huge range of gas prices and seems to be unusual in its spread.

My guess is that we're seeing the impact of Jeff Rubin's observation in Los Angeles.

He's dead on accurate.

Too bad he's in Canada.
We need him here in California working in the Port of LA.

My SWAG

If these were destined for transport with goods inside the containers for destinations in the US, you might expect that the containers would be more randomly grouped as they were readied for truck transport to the next destination.

Keeping them stacked by shipping line makes it easier to keep inventory of how many containers are dormant in a particular port..... and where the company's assets (containers) are.

Compare your images to the google street view.... the containers appear to be more random in google.

—

Hi Fiattack!
The FED is a benevolent non-profit organization with the interests of the American People placed ahead of its own!

Ceridian/UCLA Index

Reading your accounts at the Port of Los Angeles reminded me of the Ceridian/UCLA Pulse of Commerce Index. The index is derived from raw data on the volume of diesel sales nationwide, an indicator of the volume of goods being shipped overland.

It is interesting to see that, over the past 3 years, the PCI has been sawtoothing flat, while the industrial production and GDP numbers are up significantly. Which trend do you think represents the true state of our economy? I'm siding with the PCI. I don't know that it's an especially useful leading indicator (though some believe it is), but if the PCI has remained flat while other government produced/influenced numbers have shot up, that's a major red flag that the "growth" being measured by the GDP numbers is not indicative of real economic activity. Notably, the PCI did indicate a recession much earlier than the GDP numbers last time, and the GDP figures were later revised downward - significantly downward.

This got me thinking - if one were to examine the GDP by industry sector, would it be easier to discern that "real" industries, such as shipping, manufacturing, retail sales, etc. are just treading water, while "paper" industries such as financial services, mortgage banking, etc. are responsible for most of the GDP growth (if not all)? I went looking for the breakdown on the BEA website, and sadly the latest reported data by industry sector is from 2011. Not exactly fresh, and not exactly distant enough from the recession to see any discernable trends. Even so, total GDP related to shipping was lagging slightly behind financial services. Another 18 months of data would be telling, though.

Update on Port

The mass of empty containers is still there, but the stacks have about 10-15% of the containers taken away.

So, out of stack that's 5 or 6 containers wide, those stacks were 6 or 7 containers high in full block rectangles.

The corner containers are removed now with say 3 containers from each corner gone.

This is the case for many stacks stretching across the miles of space.

Therefore, my conclusion is that the containers are going back to China.

The China Shipping cargo ship was stacked to about 6 containers higher than the deck line across the entire ship.

I'm guessing that the ship carries something like 600 containers above deck and another 400 below.

I looked from the bridge at the Toyota receiving lot. Toyota's lot was full of cars back four weeks ago. Now, half of those cars are gone. Maybe, just guessing, 500-800 cars moved in 4 weeks? Wow...Toyota is back in the game. I might go buy some Toyota based on what I'm seeing. They're moving cars. I guess the question is how many of those cars I see on the road in the next four weeks. Must be the end of the 2013 assembly line cars?

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